January 17, 2013

Gov. Rick Snyder's call for higher vehicle registration fees and changes to the gas tax is sure to be a tough sell to the public and the Legislature. But, Snyder said in his State of the State address Wednesday, the bill to fix roads will only grow the more time passes. / JARRAD HENDERSON/Detroit Free Press

Hundreds of protesters angry over the passage of right-to-work legislation last month gather at the Capitol before Snyder's speech. The governor alluded to the explosive debate. "I hope we can work together," he said Wednesday. / KATHLEEN GALLIGAN/Detroit Free Press

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LANSING -- Gov. Rick Snyder called for $1.2 billon in higher gas taxes and vehicle registration fees to help repair the state's crumbling road infrastructure in his third State of the State address Wednesday, setting up what is sure to be a tough fight for both public support and votes in the Legislature.

Snyder -- who spoke amid a beefed-up Michigan State Police presence at the state Capitol, where hundreds of noisy union protesters angered by passage of right-to-work legislation last month had gathered outside -- called for removing the state gas taxes paid at the pump in favor of a percentage wholesale gas tax.

But he did not lay out a specific percentage value for the new tax or say how much vehicle registration fees should be raised. He wants the Legislature to work out the details.

"This is not about costing us money; this is about saving us money," said Snyder, stressing that the longer road and bridge repairs are put off, the larger the repair bill will be.

"We can decide how long we want to argue or how political we want to make it, or we can just get it done," he said.

Snyder's plan calls for a local option under which counties could approve additional vehicle registration increases to fund local road improvements.

Kirk Steudle, director of the Michigan Department of Transportation, said the $1.2-billion target equates to about $120 extra from each vehicle. That can come from higher gas taxes, higher registration fees, or a combination of both, Steudle said.

The call for more revenues to fix and maintain the state's crumbling roads -- a tall order with a Republican-controlled Legislature that is loathe to increase taxes and a Democratic minority in an uncooperative mood over the right-to-work battle -- was the centerpiece of a wide-ranging speech in which Snyder highlighted key changes of the last two years that included elimination of the Michigan Business Tax, a scheduled phaseout of the personal property tax on industrial equipment and elimination of about 1,000 business regulations.

He said the state is growing, both in population and gross domestic product, its Rainy Day Fund has swelled from $2 million to $500 million, and the state has reduced its long-term retirement liabilities by more than $21 billion.

"We're a role model," said Snyder, a Republican. "I wish Washington, D.C., would follow the model we're achieving."

Though the extra road revenue could be a tough fight in both parties, Snyder's speech was generally praised by Republicans and panned by Democrats.

"I saw more of that relentless determination to focus on hardworking taxpayers by making commonsense decisions that will help move Michigan forward," said House Speaker Jase Bolger, R-Marshall.

But Senate Minority Leader Gretchen Whitmer, D-East Lansing, said Snyder's approach once again favors corporate interests at the expense of regular citizens.

"We share the same goals on roads," Whitmer said. "But if it's just another shift onto the people, it's not something I'll be able to support."

Snyder also called for online voter registration and "no reason" absentee voting -- two measures to make it easier to vote, which have typically had the support of Democrats.

And he announced support for several other programs to boost dental care for children and early childhood education, and to help veterans get jobs and needed services.

Without mentioning right-to-work by name, Snyder alluded to the explosive debate in December over legislation that makes it illegal to require financial support of a union as a condition of employment. Snyder has faced accusations of betrayal because he had said for two years that the issue was too divisive and not on his agenda before coming out in favor of it and backing its passage into law in five days, amid protests.

"I wish it hadn't happened," Snyder said of the controversy. "I hope we can work together. I hope we can work to avoid these kinds of situations."

Brett Brown, a UAW Local 602 member from GM's Delta Township plant who was demonstrating outside the Capitol before the speech, said right-to-work is "snake oil" that he expects will be repealed in 2014.

"I think it was dishonest ... doing it at the last minute," Brown said.

Detroiter Oliver Cole, a photographer, said he also wasn't impressed with Snyder or his recommendations.

"Now the entire state sees the wolf in sheep's clothing," Cole said. "The fledgling movie industry was just the first of many that ... Gov. Rick Snyder betrayed."

Snyder has said he supports freedom of workers to choose whether to join a union, but he would not have pursued the issue at that time if he was fully in charge of the political agenda. Pressure to pass the law built after the Nov. 6 defeat of a union-backed ballot initiative to enshrine collective-bargaining rights in the state constitution.

"I liked the tone of the speech of trying to put the past behind us," said state Sen. Rebekah Warren, D-Ann Arbor. "But it was really lacking on any mention of health care, and we're going to have a lot of stuff thrown at us. I'm glad he's focusing on getting funding for early childhood development, but he really had nothing else to say about education."

The roads issue was Snyder's big item Wednesday.

The governor wants it dealt with quickly because "the closer you get to the 2014 election, it's going to be harder to get it through the Legislature," Snyder's director of strategy, Bill Rustem, said before the speech.

Snyder sold the need for increased revenue as a way to protect existing assets against further deterioration, rather than as a tax increase, saying the state will have to pay more in the future if it doesn't raise extra money for roads now.

Snyder said some of the investment should be immediately offset because Michigan motorists pay about $81 more per vehicle in repairs than those in other states.

He also said the extra road spending would help the economy by creating 12,000 jobs.

Though the Michigan Chamber of Commerce and other groups have come out in favor of raising more money for roads, even the business community isn't entirely on board.

"While we recognize the need for good roads and adequate funding, this is a difficult time for tax and fee increases on Michigan small-business job providers," National Federation of Independent Business state director Charlie Owens said in a statement this week.

"NFIB small-business owners have made it clear that they are not supportive of a motor fuels tax increase or a hike in vehicle registration fees," Owens said.

The last time state lawmakers hiked the gas tax was in 1997, when a 4-cent hike squeaked through the Legislature under Republican Gov. John Engler.

Early in 2012, lawmakers introduced a proposal to abolish the state's 19-cent-a-gallon gasoline tax and 15-cent-a-gallon diesel tax and replace them with a 10.1% wholesale tax on both.

Based on the current wholesale price of about $2.55 a gallon, such a tax would produce a tax of about 25.7 cents a gallon and generate close to $500 million a year, with state revenues rising along with the price of gas.

State vehicle registration fees are calculated through a somewhat complicated formula based on the manufacturer's suggested retail price, with certain reductions for used vehicles.

A new 2013 vehicle with a suggested retail price of $25,000 would generate a registration fee of $123, Michigan Secretary of State spokesman Fred Woodhams said.

Hiking the registration fee by about $60 per car or light truck on average would generate as much as $600 million a year, officials said.

Snyder said Sen. Roger Kahn, R-Saginaw Township, will take the lead on the road funding issue. Kahn has been backing legislation for a funding plan significantly different from the one Snyder outlined Wednesday.

But Kahn said after the speech that he thinks common ground can be found between his approach, which involves a voter-approved increase in the sales tax, and the proposal outlined by Snyder.

"That was a marvelous call to action he had at the end of his speech," Kahn said of Snyder's call to ignore the politics of the issue and get the problem solved. "Fixing the roads will help tourism and create jobs. And that's where we need to be focused."

Mark Griffin, president of the Michigan Petroleum Association, representing gasoline wholesalers, said a wholesale tax is the wrong way to go and the state would do better to use sales tax revenues to support roads.

With more efficient vehicles resulting in less gasoline consumption, Michigan shouldn't be "trying to do what hasn't worked in the past," Griffin said.

But Lance Binoniemi, vice president of government affairs for the Michigan Transportation & Infrastructure Association, a road builder group, said the governor passionately delivered the proper message.

"This is a call for the Legislature to find a solution," Binoniemi said. "I can't predict the political will of the Legislature."

Binoniemi's group is part of a broad coalition calling itself the Michigan Transportation Team, which is using the slogan "Just fix the roads."

Among Snyder's proposals to keep the state moving, he also announced that Paul Hillegonds, a veteran lawmaker and businessman, will lead the regional transit authority that was created by the Legislature last year to try to improve public transportation in southeast Michigan.

The authority is designed to help better coordinate public transit and will have representatives from metro Detroit counties. The leaders of Wayne, Oakland, Macomb and Washtenaw counties each get two appointments to the authority. Detroit Mayor Dave Bing gets one, and Snyder gets to appoint the chairman.

"I couldn't think of anyone better for the job," Snyder said.

Hillegonds has a long and distinguished reputation as someone who can bridge political and partisan divides to come to workable solutions.

He's currently the senior vice president for corporate affairs for DTE Energy. But he also served as the head of Detroit Renaissance, a civic organization dedicated to helping lead the revitalization of Detroit.

Hillegonds said he was called about the transit authority position a few weeks ago. "I was surprised. ... I'm very excited about the opportunity," he said. "Great regions have coordinated public transit agencies."